1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mestny [16]
3 years ago
5

You are considering purchasing a put option on a stock with a current price of $26. The exercise price is $28, and the price of

the corresponding call option is $2.65. According to the put-call parity theorem, if the risk-free rate of interest is 6% and there are 90 days until expiration, the value of the put should be ____________.
Business
2 answers:
Artyom0805 [142]3 years ago
6 0

Answer:

-22.42

Explanation:

Given,

Stock = $26, Call = $2.65, Exercise price = $28, Risk-free rate = 6%, Time = 0.24657 (90 / 365)

The put-call parity formula is $ C+Ke^{-rT} = P+S_0 $ where:

C = Call Price, K = Exercise Price, r = Risk-Free Rate, T = Time to Expiration,

P = Put Price, and $S_0$ = Stock Price

Subtracting $S_0$ from both sides, we get

$ P=C+Ke^{-rT} -S_0 $

$P= 2.65 + 28 e^{-(6)(0.24657)}-26 $

$P= 2.65 + 28 e^{-(1.47942)}-26 $

$P= 2.65 + (28) (0.033157)-26 $

    = -22.42

Goshia [24]3 years ago
4 0

Answer: $4.24

Explanation:

According to the Put-Call Parity, the value would be expressed by;

Put Price = Call price - Stock price + Exercise price *e^-(risk free rate *T)

T is 90 days out of 365 so = 90/365

= 2.65 - 26 + 28 * 2.71 ^ (-0.06 * 90/365)

= $4.24

You might be interested in
How long does it take for tax return to be deposited?.
Lostsunrise [7]

Answer:

about six to eight weeks

Explanation:

If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date IRS receives your return. If you file your return electronically, your refund should be issued in less than three weeks, even faster when you choose direct deposit.

5 0
2 years ago
IRR in Excel!(CHAPTER 9) Your company is considering a new project opportunity. It would immediately receive $200. In return, in
oksian1 [2.3K]

Answer:

12.44%

Explanation:

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

cash floe in yer0 = 200

cash flow in year 1 = -80

cash flow in year 2 = - 70

cash flow in year 2 = - 60

cash flow in year 2 = - 40

irr = 12.44%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

3 0
3 years ago
Some risks associated with investing in real estate are?
kirill [66]

An investor must see what circumstances while investing in a real estate area. So the investor must be careful while investing.

One can loose tenant and his invested capital, tenant capital and fixed turnovers would be largely affected. increased property taxes and increased cost of operations a real estate investor is exposed to all these.

Some other risks associated with taking huge debts for investing in a property, liquidity risks , management risks, legislative risks, and environmental risks with several legal risks. It also include sometimes bad locations, negative cash flows etc.

To learn more about real estate here,

brainly.com/question/10336196

#SPJ4

4 0
2 years ago
When citibank repays a loan it had previously taken from the fed, it the money supply?
Naya [18.7K]

The money supply decreases when Citi Bank repays a loan they had previously taken from the Fed. The money supply within Citi Bank decreases because they no longer have the money as they have paid it back to the Fed. The Fed's supply of money then increases.

7 0
3 years ago
QUESTION 1
ser-zykov [4K]

Answer:

It dosent show a question.

3 0
3 years ago
Other questions:
  • A firm has the following accounts and financial data for​ 2017: Sales Revenue ​$3,060 Accounts Receivable ​$500 Interest Expense
    11·1 answer
  • A price floor that is set above the normal equilibrium price will lead to: A. An decrease in consumer surplus, a decrease in pro
    6·1 answer
  • You purchased 200 shares of ABC stock on July 15th. On July 20th, you purchased another 100 shares and then on July 22st you pur
    6·1 answer
  • On January 1, 2017, Windsor Corporation sold a building that cost $271,010 and that had accumulated depreciation of $101,000 on
    11·1 answer
  • Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates
    13·1 answer
  • A company has 1000000 shares outstanding trading at $15 a piece. Managers believe that the discount rate appropriate for the ris
    6·1 answer
  • A new machine can be purchased today for $450,000. The annual revenue from the machine is calculated to be $72,000, and the equi
    13·1 answer
  • Wallace Company provides the following data for next year: MonthBudgeted Sales January$ 120,000 February 108,000 March 132,000 A
    13·1 answer
  • Capital State University agreed to pay for Irene to attend their school and play lacrosse for their team. As part of their arran
    12·1 answer
  • After a loan is sold in the secondary market, the originating lender may be required to repurchase the loan due to
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!